Agency for blind spending halted State raises questions after audit of Blind Industries.

A Baltimore Circuit Court judge is barring a quasi-public agency for the blind from any discretionary spending until Monday after a state-ordered audit raised questions about "inappropriate" entertainment expenses, faulty employment practices and big raises for executives.

Although Blind Industries and Services of Maryland is losing money, it gave its top executives raises and paid $2,000 toward a country club membership for President Richard J. Brueckner, according to a lawsuit filed by Maryland's attorney general.

Blind Industries received $1.2 million, or almost 10 percent, of its annual $13 million budget from Maryland taxpayers. The non-profit agency employs 250 people and provides training, education and jobs for blind adults.

The Baltimore-based agency, which is overseen by 11 trustees appointed by the governor, manufactures clothing, note pads and other goods at plants in Baltimore, Salisbury and Cumberland.

Blind Industries failed to hire enough blind people as required by law, the audit said.

The audit also said Brueckner and Frederick Puente, chairman of the board of trustees, tried to set up a soft-drink business that would have competed with Blind Industries' vending division. The plan, however, fell through.

After an informal conference with both sides yesterday, Baltimore Circuit Judge Joseph H. H. Kaplan said he will sign orders temporarily barring Blind Industries from spending money on non-payroll expenses and from destroying business records.

He delayed until Monday a decision on the state's request for a review of Blind Industries' operations and the appointment of a receiver to control the agency's assets. "It was agreed to put everything on hold until Monday to give the board of trustees [of Blind Industries] an opportunity to try to agree to certain accountings being performed," the judge said.

Stanford Hess, the attorney for Blind Industries, portrayed the suit as a philosophical difference of opinion between the state and his client over the right way to run an agency that receives state money and contracts. "There's a lot of smoke in this whole thing, but when you tear it apart, I don't know what's there," Hess said.

Deputy Attorney General Ralph Tyler, however, put it another way. "It may well be that where there's smoke, there's no fire," he said, "but there may well be a fire.

"We don't know whether there has been misuse of state money," Tyler said. "There's an audit that raises extremely serious questions. We intend to pursue the documents to see what happened to our money."

Brueckner said the suit is misleading. "There are a lot of facts that are put together in inappropriate ways. We feel there has been no wrongdoing," he said.

* The audit said Blind Industries paid $2,000 last January for Brueckner's country club membership but did not record the payment to him as income. Officials also charged meals, alcoholic drinks, golf fees and baseball tickets to Blind Industries but did not reimburse the agency, it said.

The board approved the country club expense as part of Brueckner's compensation package, said trustee James R. Berens.

As for the entertainment expenses, attorney Hess said Blind Industries was only trying to keep up with its competitors. "Don't salesmen have to compete with other salesmen selling legal pads, and aren't those other salesmen wining and dining their customers?" he asked.

* Blind Industries violated federal and state laws requiring that blind employees work at least 75 percent of the total hours devoted to non-administrative duties. The audit said the blind made up only 61 percent of the hours worked in fiscal 1991.

Brueckner denies the charge, Hess said.

* The audit said Brueckner and Puente sought to buy unspecified assets of the Seven-Up Bottling Co. of Salisbury. Brueckner and Blind Industries staff developed the purchase proposal under the corporate name of Delmarva Beverage Enterprises. Principal shareholders were Puente and Brueckner.

Seven-Up is a direct competitor of the new vending services division of Blind Industries, the lawsuit said, and the Delmarva venture could have posed a conflict of interest for Brueckner and Puente.

Hess said the two men did not buy any assets.

* Brueckner's annual salary rose from $62,000 in 1989 to the current $97,200 and is scheduled to reach $101,000 next month, the suit said. Meanwhile, the agency saw its net income drop from $655,000 in fiscal 1989 to a loss of $793,900 in fiscal 1991. Salaries of other managers rose "dramatically," but workers' hourly wages did not. The lowest-paid workers earn $4.30 an hour, the audit said.

"He's tried to turn it more into a private industry. In doing that, he's had to buy more equipment and do some things that in the short run look unprofitable but in the long run will be profitable," Hess said.

* The audit said Blind Industries was not reimbursed for $145 to repair Brueckner's personal vehicle last February. Brueckner denies the allegation, Hess said.